Sinclair’s Diamond Sports units launch exchange offer, consent bid for 5 3/8% secured notes

By Rebecca Melvin

Concord, N.H., Feb. 15 – Sinclair Broadcast Group, Inc.’s indirect subsidiaries, Diamond Sports Group LLC and Diamond Sports Finance Co., commenced an exchange offer on Tuesday of 5 3/8% senior secured second-lien notes due 2026 (CUSIPs: 25277LAF3, U2527JAD7, 25277LAG1) for any and all of the issuers’ outstanding 5 3/8% senior secured notes due 2026 (Cusips: 25277LAA4, U2527JAA3), according to a company news release.

The companies are also soliciting consents from holders of the existing notes to amend the notes.

There is $3.05 billion principal amount of the existing secured notes outstanding. The exchanged notes will have the same interest rate and maturity date as the existing notes as well as same optional redemption terms. No accrued and unpaid interest will be paid on the existing notes in connection with the exchange offer.

Holders accepted for exchange will be deemed to have waived the right to receive any payment for interest accrued from the date of the last interest payment date. However, the first interest payment for the exchange notes will include interest from the most recent interest payment date for such corresponding tendered notes on the principal amount of such exchange second-lien secured notes. Interest will be the same if holders tender before the early tender time, but it will be lower after the early deadline with interest accruing only on the aggregate principal amount of exchange notes received by the eligible holder.

The exchanged notes will be guaranteed by Diamond Sports Intermediate Holdings LLC, the issuers’ direct parent, and certain wholly owned subsidiaries of Holdings. The exchanged notes are not guaranteed by Sinclair, Sinclair Television Group, Inc. or any of STG’s subsidiaries.

The exchange consideration prior to the early deadline at 5 p.m. ET on Feb. 28 will be $1,000 principal amount of exchanged second-lien secured notes. After the early tender time, the exchange consideration will be $990 principal amount of the exchanged notes.

The exchange offer will expire at 11:59 p.m. ET on March 14. The early settlement deadline is expected to occur on March 1. The final settlement is expected to occur on March 16.

Under the consent solicitation, the companies are seeking to amend the notes to eliminate restrictive covenants and consummate certain financing transactions, including Diamond Sports Group’s incurrence of a new $635 million term loan on a first-priority lien basis, the issuers’ incurrence of the exchange second-lien secured notes that are issued and delivered in exchange for the existing secured notes tendered in the exchange offer and Diamond Sports Group’s incurrence of new second-priority lien term loan and revolving credit facilities in exchange for its existing term loans and existing revolving credit facility.

The changes also provide for the subordination of the lien priority of the liens securing the obligations under the existing secured notes that remain outstanding following completion of the exchange offer and consent solicitation to the liens securing the new $635 million first-priority lien term loan, the new second-priority lien term loan and revolving credit facilities and the exchange second-lien secured notes (including refinancing of all first priority and second priority debt), as well as future second-lien secured debt, under the terms of a new first-/second-/third-lien intercreditor agreement.

The changes also provide for collateral sharing on a pari passu third-lien basis with the existing term loans and existing revolving credit facility commitments which have not been exchanged for new second-priority lien term loan and revolving credit facilities, as well as with future secured debt incurred on a third-lien basis, under the terms of a new third-lien pari passu intercreditor agreement that will replace the existing first-lien intercreditor agreement related to the existing secured notes.

The issuers must receive consents from holders of two-thirds of the outstanding existing notes not owned by the issuers or affiliates to adopt the amendments.

The exchange offer and consent solicitation, including the issuers’ acceptance of validly tendered notes, is conditioned upon the receipt of the requisite consents, Diamond Sports Group obtaining no less than $635 million aggregate principal amount under the new first-priority lien term loan, and obtaining consent by lenders holding at least a majority of the aggregate principal amount of its outstanding loans and commitments under its the existing term loans and existing revolving credit facility.

The information and exchange agent for the exchange offer is Ipreo LLC (888 593-9546, 212 849-3880, ipreo-exchangeoffer@ihsmarkit.com).

Sinclair is a television broadcasting company based in Hunt Valley, Md.

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